Kathmandu. The Independent Power Producers Association (IPPAN) has demanded the government to scrap the government’s decision to sign power purchase agreement (PPA) on take-and-pay basis, saying it would end the general energy sector.
Deputy Prime Minister and Finance Minister Bishnu Poudel announced in the budget and program for the upcoming fiscal year 2082/083 BS on May 15, 2082 that PPA will be made on the take and pay basis of the run-of-the-river project.
A statement issued after the meeting reads, “At a time when the private sector is investing in this way in the energy sector, the announcement made by the Government of Nepal in the budget and program for the upcoming fiscal year 2082/083 BS on May 15, 2082, that PPA will be done on the take-and-pay basis of the run-of-the-river project has closed the way for the construction of about 17,000 MW projects.” ”
We believe that the announcement has been made in the budget to eliminate the general energy sector, even though it is clear that banks and financial institutions will not manage finances on the basis of take-and-pay. This announcement has not only closed the way for the construction of about 300 projects of 17,000 MW, but has also submerged the investment of more than Rs 66.22 billion so far invested by private promoters for these projects.
We believe that the provision
of PPA only in take-and-pay introduced by the Government of Nepal in the budget is not only against the Energy Development Roadmap, 2081 with the goal of generating 28,500 MW of TAG_OPEN_span_17}} recently approved by the Council of Ministers, but is also a major obstacle to achieving the target of the 16th Five-Year Plan of the National Planning Commission.
This provision TAG_OPEN_div_21 of the budget has closed the way for the Government of Nepal to achieve all the objectives and goals, including encouraging the private sector to invest in energy in various public forums, attracting foreign investors and exporting 10,000 MW to neighboring India. It is also against the Electricity Act, 2049, Hydropower Policy, 2058, Water Resources Policy and Act. We believe that this announcement of the budget has completely ignored the government’s plan to achieve the country’s prosperity through energy development. The announcement has made the private sector, which has invested more than Rs 1.5 trillion so far and is now bent on investing more than Rs 3 trillion, completely pessimistic.
Hydropower policy states that the monopoly of electricity authority in generation, distribution and transmission will end in the year 2058, but at a time when nea’s monopoly has been maintained without fragmentation so far, on the one hand, the private sector should be forced to go to a single buyer without participating in the business by not giving license of electricity trade and transmission line and on the other hand, the government should announce through the budget that after investing more than 66 billion by giving a license from the Department of Power Development, the government should announce through the budget that it will do only PPA after investing more than 66 billion rupees. We have taken it as a grossly anti-private sector move by the Government of Nepal.
Although TAG_OPEN_div_18 the budget had only announced to open the doors of electricity trade to the private sector, we would have been in a position to find the market and do PPA on our own, but without that, such a provision of the budget presented in the Parliament to discourage the private sector, which is active in the construction of most ROR projects at the same time, has made the private sector pessimistic. Private sector promoters feel humiliated by the government. We strongly urge to immediately amend the provision of take-and-pay, which is anti-private sector and eliminate the private sector in the energy sector, and create an environment for PPA to be done by the Electricity Authority. Otherwise, we would like to inform through this press release that the private sector will fight hard against it.
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